New year means new salary requirements for overtime exemptions

published in McAfee & Taft EmployerLINC Alert | December 20, 2019

Under the Fair Labor Standards Act, to avoid paying overtime for work performed by “white collar” executive, administrative and professional employees, an employee must satisfy duties’ tests and be paid a salary that meets a weekly minimum threshold. With the new year fast approaching, remember these minimum salary requirements increase. Beginning January 1, 2020, the minimum salary for the overtime exemption increases from $455 per week ($23,660 annually) to $684 per week ($35,568 annually).

After the first of the year, two other overtime changes go into effect:

  • Nondiscretionary bonuses and incentives (including commissions) that are paid annually may count towards up to 10% of the salary minimums.
  • The minimum annual compensation for the highly compensated employee overtime exemption increases from $100,000 to $107,432.

Now is a good time to make sure the white collar employees you have treated in the past as exempt from overtime will remain exempt after January 1, 2020 under the new rules. If you have any questions about compliance with the new overtime rules or other wage and hour laws, please do not hesitate to contact one of our McAfee & Taft labor and employment attorneys.